The Society for Aerospace Studies, New Delhi V. ADIT (E), New Delhi

CO 40/DEL/2012

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7967 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 12 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 12-10-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 08-10-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 29-02-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Capital asset; Depreciation; Earning of tax free income

Judgement Text

ITA NO. 3644/DEL/2011 & CO NO. 40/DEL/2012 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H NEW DELHI BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 3644/DEL/2011 A.Y. : 2008-09 ASSTT. DIRECTOR OF INCOME TAX (E), TRUST CIRCLE IV, NEW DELHI R.NO. 204, 2 ND FLOOR, AAYAKAR BHAVAN, LAXMI NAGAR, DISTT. CENTRE, DELHI 110 092 VS. THE SOCIETY FOR AEROSPACE STUDIES, D-43, SUJAN SINGH PARK, NEW DELHI 11 0003 (PAN/GIR NO. : AAATT1263C) AND C.O. NO. 40/DEL/2012 (IN ITA NO. 3644/ DEL/2011) A.Y. 2008-09 THE SOCIETY FOR AEROSPACE STUDIES, VS. ADIT(E), D-43, SUJAN SINGH PARK, ROOM NO. 204, AYAKAR BHA VAN, NEW DELHI 11 0003 LAXMI NAGAR DISTT. CENTRE, (PAN/GIR NO. : AAATT1263C) DELHI 110 092 (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) ASSESSEE BY : SH. ANIL JAIN, CA DEPARTMENT BY : MRS. SHUMANA SEN, SR. D.R. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA : AM PER SHAMIM YAHYA : AM PER SHAMIM YAHYA : AM PER SHAMIM YAHYA : AM THIS APPEAL BY THE REVENUE AND CROSS OBJECTION BY T HE ASSESSEE EMANATE OUT OF ORDER OF THE LD. COMMISSIONER OF INCO ME TAX (APPEALS) DATED 25.5.2011 AND PERTAIN TO ASSESSMENT YEAR 200 8-09. 2. THE ISSUES RAISED IN THE REVENUES APPEAL READ AS UNDER:- ITA NO. 3644/DEL/2011 & CO NO. 40/DEL/2012 2 (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. COMMISSIONER OF INCOME TAX (A) HAS ERRED IN ALLOWING DEPRECIATION ON CAPITAL ASSETS AMOUNT ` 4,55,683/- AS THE EQUIVALENT AMOUNT HAS ALREADY BEEN CLAIMED BY THE ASSESSEE AS APPLICATION OF MONEY. (II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. COMMISSIONER OF INCOME TAX (A) HAS ERRED IN DELETING THE ADDITION OF ` 13,72,655/- MADE ON ACCOUNT OF PROVIS ION FOR DIMINUTION IN THE VALUE OF INVESTMENT, AS THE FULL AMOUNT OF ACCUMULATION U/S. 11(2) OF THE ACT AS CLAIMED BY THE ASSESSEE IN REVISED FORM 10 WAS ALLOWED TO THE ASSESS EE. (III) THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER O R AMEND ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF HEARIN G. 3. APROPOS ISSUE OF DEPRECIATION ON CAPITAL ASSETS OF ` 4,55,683/- ON THIS ISSUE ASSESSING OFFICER NOTED THAT ASSESS EE HAS CLAIMED DEPRECIATION OF ` 4,55,683/- IN THE INCOME AND EXPE NDITURE ACCOUNT AND THE EQUIVALENT AMOUNT HAS BEEN CLAIMED AS APPLI CATION IN INCOME AND EXPENDITURE ACCOUNT AS WELL AS IN THE COMPUTAT ION OF INCOME. ASSESSING OFFICER WAS OF THE OPINION THAT FOR THIS ASSESSEE WAS CLAIMING DOUBLE DEDUCTION WHICH HE IS NOT ENTITLED. HENCE, HE DISALLOWED A SUM OF ` 4,55,683/-. 4. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (A) REFERRED THE DECISION OF THE HONBLE PUNJAB AND HARY ANA HIGH COURT IN THE CASE OF C.I.T. VS. TINY TOTS EDUCATION SOCIETY 330 ITR 21. CONSIDERING THE ABOVE CASE LAW, LD. COMMISSIONER OF INCOME TAX (A) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. ITA NO. 3644/DEL/2011 & CO NO. 40/DEL/2012 3 5. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. WE FIND THA T THIS ISSUE INVOLVED IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY TH E DECISION OF THE HONBLE PUJAB AND HARYANA HIGH COURT IN THE CASE OF TINY TOTS EDUCATION SOCIETY CITED ABOVE. IN THIS CASE THE DE CISION WAS AS UNDER:- HELD, DISMISSING THE APPEAL, THAT THE ASSESSEE WAS NOT CLAIMING DOUBLE DEDUCTION ON ACCOUNT OF DEPRECIATIO N. THE INCOME OF THE ASSESSEE BEING EXEMPT, THE ASSESSEE W AS ONLY CLAIMING THAT DEPRECIATION SHOULD BE REDUCED FR OM THE INCOME FOR DETERMINING THE PERCENTAGE OF FUNDS WHICH HAD TO BE APPLIED FOR THE PURPOSE OF THE TRUST. IT COU LD NOT BE HELD THAT DOUBLE BENEFIT WAS GIVEN IN ALLOWING TH E CLAIM FOR DEPRECIATION FOR COMPUTING INCOME FOR PURPOSES OF SE CTION 11. 6.1 CONSIDERING THE ABOVE, WE FIND THAT THERE IS NO INFIRMITY OR ILLEGALITY IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (A). ACCORDINGLY, WE AFFIRM THE SAME. 7. APROPOS ISSUE OF DELETION OF ADDITION OF ` 13,72 ,655/- ON THIS ISSUE THE ASSESSING OFFICER NOTED THAT AS SESSEE HAS CLAIMED ` 13,72,655/- AS PROVISION FOR DIMINUTION OF VALUE OF INVESTMENT. ASSESSING OFFICER ASKED THE ASSESSE E WHY THIS PROVISION FOR DIMINUTION IN THE VALUE OF INVESTMENT BE TAKEN AS EXPENDITURE. ASSESSEE REPLIED THAT IT WAS THE OBJECT OF THE SOC IETY TO SAFEGUARD ITS ASSETS AND ACCORDINGLY IF THERE IS DIMINUTION IN TH E VALUE OF THE ASSETS THE SAME SHOULD BE PROVIDED FOR AND IN THIS VIEW OF THE MATTER THE ITA NO. 3644/DEL/2011 & CO NO. 40/DEL/2012 4 SAME EXPENDITURE WHICH IS TO BE PROVIDED FOR AND I T SHOULD BE CONSIDERED AS UTILIZATION OF THE FUNDS. ASSESSING OFFICER WAS NOT CONVINCED. HE HELD THAT PROVISION FOR DIMINUTION I N VALUE OF INVESTMENT OF ` 13,72,655/- CANNOT BE ALLOWED AS AP PLICATION. ASSESSING OFFICER HELD THAT THIS AMOUNT HAS NOT B EEN APPLIED FOR THE PURPOSE OF OBJECTS OF THE SOCIETY. 8. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (A) HELD AS UNDER:- I HAVE CONSIDERED THE FINDING OF THE ASSESSING OFF ICER IN THE ASSESSMENT ORDER AND THE SUBMISSION OF THE L D. A.R. SUBMITTED VIDE LETTER DATED 6.5.2011. THE LD. A.R.S SUBMISSION VIDE PARA 2.1 OF THE LETTER FILED ON 6.5.2011 IS VERY SPECIFIC, WHEREIN THE LD. A.R. HA S CLARIFIED THE MATHEMATICAL ERROR AMOUNTING TO ` 27,700/- AND HAS EXPLAINED THAT THERE WOULD BE LESS ACCUMULATION BY AN AMOUNT OF ` 27,700/-. THE ASSESSING OFFICER HAS FULLY REJECTED THE ENTIRE ACCUMULATION WHICH WAS TO BE ALLOWED TO THE ASSESSEE. IN THIS REGARD, ASSESSING OFFICER IS DI RECTED TO VERIFY THE CLAIM OF THE APPELLANT WITH REGARD TO MATHEMATICAL ERROR AMOUNTING TO ` 27,700/- AS CLAIMED BY THE APPELLANT AND ALLOW THE CLAIM OF THE APPELLANT AFTER PROPER VERIFICATION. GROUNDS NO. 2 AND 3 ARE PARTLY ALLOWED. 9. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEA L BEFORE US. ITA NO. 3644/DEL/2011 & CO NO. 40/DEL/2012 5 10. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED. WE FIND THAT IN THIS CASE, LD. COMMISSION ER OF INCOME TAX (A) HAS NOT GIVEN A SPEAKING ORDER AND NOT PROPERLY DEALT WITH THE ISSUE. HE HAS REMITTED THE MATTER ALSO TO THE ASSESS ING OFFICER WHICH WAS BEYOND OF HIS JURISDICTION. UPON CAREFUL CON SIDERATION, WE FIND THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, IN TEREST OF JUSTICE WILL BE SERVED IF THE MATTER IS REMITTED TO THE FILE OF TH E ASSESSING OFFICER. THE ASSESSING OFFICER IS DIRECTED TO EXAMINE THE ISS UE AFRESH. WE HOLD AND DIRECT ACCORDINGLY. 11. IN THE RESULT, THE REVENUES APPEAL STANDS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. ASSESSEES CROSS OBJECTION ASSESSEES CROSS OBJECTION ASSESSEES CROSS OBJECTION ASSESSEES CROSS OBJECTION 12. THE GROUNDS RAISED IN THE CROSS OBJECTION READ A S UNDER:- I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED LD. COMMISSIONER OF INCOME TAX (A) HAS ERRED IN NOT DIRECTING THE ASSESSING OFFICER TO DELETE A SUM OF ` 7,19,001/- BEING THE AMOUNT OF EXEMPT INCOME INCLUDED IN THE ASSESSED INCOME. II) THE AUTHORITIES BELOW ERRED IN INCLUDING IN THE ASSESSABLE INCOME OF THE RESPONDENT A SUM OF ` 719001/- BEING AMOUNT OF DIVIDEND (ON MUTUAL FUND) RECEIVED BY RESPONDENT WHICH IS AN EXEMPT INCOME. III) APPELLANT CRAVES FOR GRANT OF PERMISSION TO AD D, ALTER OR DELETE ANY GROUND OF APPEAL AT OR ANY TIME BEFORE THE HEARING OF APPEAL. ITA NO. 3644/DEL/2011 & CO NO. 40/DEL/2012 6 13. WE FIND THAT ON THIS ISSUE ASSESSEE HAS URGE D THAT LD. COMMISSIONER OF INCOME TAX (A) HAS ERRED IN NOT DIRE CTING THE ASSESSING OFFICER TO DELETE A SUM OF ` 7,19,001/- B EING THE AMOUNT OF EXEMPT INCOME INCLUDED IN THE ASSESSED INCOME. IT HAS BEEN FURTHER URGED THAT THE AUTHORITIES BELOW ERRED IN INCLUDING IN THE ASSESSABLE INCOME OF THE ASSESSEE A SUM OF ` 719001/- BEING A MOUNT OF DIVIDEND RECEIVED BY ASSESSEE WHICH IS AN EXEMPT INCOME. 14. WE HAVE HEARD THE RIVAL CONTENTIONS ON THIS ISSUE AND PERUSED THE RECORDS. WE FIND THAT THERE IS NO CLAIM BY TH E ASSESSEE EITHER BEFORE THE ASSESSING OFFICER OR LD. COMMISSIONER OF INCOME TAX (A) THAT A SUM OF ` 719001/- WAS AN EXEMPT INCOME AND SH OULD NOT HAVE BEEN INCLUDED IN THE ASSESSEES INCOME. WE FIND TH AT NO ADDITION IN THIS REGARD WAS MADE BY THE ASSESSING OFFICER AND NOT SUSTAINED BY THE LD. COMMISSIONER OF INCOME TAX (A). IN THIS VIE W OF THE MATTER, THE ISSUE DOES NOT AT ALL EMANATE OUT OF ORDERS OF THE AUTHORITIES BELOW. 14.1 LD. COUNSEL OF THE ASSESSEE HAS SUBMITTED THAT HE WAS RAISING THE ISSUE ON THE ANVIL OF THE HONBLE APEX COURT D ECISION IN THE CASE OF NATIONAL THERMAL POWER COMPANY LTD. VS. C.I.T. 229 ITR 383 (SC). WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AND PERUSE D THE RECORDS. WE FIND THAT IN THE CASE CITED ABOVE, IT WAS HELD T HAT TRIBUNAL HAS DISCRETION TO ALLOW OR NOT ALLOW A NEW GROUND TO B E RAISED. BUT WHERE THE TRIBUNAL IS ONLY REQUIRED TO CONSIDER A QUESTIO N OF LAW ARISING FROM THE FACTS WHICH ARE ON RECORD IN THE ASSESSMENT PRO CEEDING, IT WAS HELD THAT SUCH A QUESTION CAN BE RAISED WHEN IT IS NECESSARY TO CONSIDER THAT QUESTION IN ORDER TO CORRECTLY THE TAX LIABILITY OF THE ASSESSEE. IN OUR CONSIDERED OPINION, THE ABOVE CASE LAW DOES NOT SUPPORT THE CASE OF THE ASSESSEE. THERE IS NO QU ESTION OF LAW ITA NO. 3644/DEL/2011 & CO NO. 40/DEL/2012 7 INVOLVED IN THIS CASE. NEITHER THE ASSESSING OFFICE R NOR THE LD. COMMISSIONER OF INCOME TAX (A) HAS MADE ANY ADDITION ON ACCOUNT OF EXEMPT INCOME. THE ASSESSEE HAS NOT REDUCED THE EX EMPT INCOME FROM THE COMPUTATION INCOME AND THE ASSESSEE IS TRYING TO RAISE A FRESH GROUND. IN OUR CONSIDERED OPINION, THE SAME I S ALSO NOT PERMISSIBLE IN VIEW OF THE DECISION OF THE HONBLE A PEX COURT IN THE CASE OF THE GOETZE (INDIA) LTD. VS. C.I.T. 284 ITR 323 (SC). HENCE, IN OUR CONSIDERED OPINION THE CLAIM OF DEDUCTION NOT M ADE BY THE ASSESSEE ORIGINALLY CANNOT BE MAINTAINED AT THIS JUNC TURE. ACCORDINGLY, WE DISMISS THE ISSUE RAISED IN THE CRO SS OBJECTION. 15. IN THE RESULT, THE REVENUES APPEAL IS PARTLY A LLOWED FOR STATISTICAL PURPOSES AND ASSESSEES CROSS OBJECTION STANDS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12/10/2012. SD/- SD/- [ [[ [U.B.S. BEDI] U.B.S. BEDI] U.B.S. BEDI] U.B.S. BEDI] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE:- 12/10/2012 SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES